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Edited version of private ruling
Authorisation Number: 1011464853533
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Ruling
Subject: Employee Investment Trust
Question 1
Will the contributions of monies by the Employer to the Trustee pursuant to the Trust Deed in respect of arm's length employees of the Employer constitute an income tax deduction under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes
Question 2
Will the loans of monies by the Employer to the Trustee pursuant to the Trust Deed constitute an income tax deduction under section 8-1 of the ITAA 1997?
Answer
No
Question 3
Will the contributions of monies made by the Employer to the Trustee pursuant to the Trust Deed for the benefit of a general class of employees constitute a 'fringe benefit' provided by the Employer to the Employee as defined in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?
Answer
No
Question 4
Will the loans of monies made by the Employer to the Trustee pursuant to the Trust Deed for the benefit of a general class of employees constitute a 'fringe benefit' provided by the Employer to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 5
Will the acquisition of investments by the Trustee constitute a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 6
Will the acquisition of Units by the Employee at market value, to which trust assets will be allocated by the Trustee, constitute a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 7
Will the loan provided by the Trustee to the Employee for the purpose of acquiring the Units constitute a 'loan fringe benefit' provided by the Trustee to the Employee under section 16 of the FBTAA?
Answer
Yes
Question 8
Where the Employee pays or accrues interest at least equivalent to the relevant notional or statutory interest rate in respect of the loan provided by the Trustee, will the taxable value of the loan fringe benefit which could arise under section 18 of the FBTAA be nil?
Answer
This question is not applicable to the scheme upon which this ruling is based.
Question 9
Will the taxable value of the loan fringe benefit be reduced to nil due to the application of the 'otherwise deductible rule' under subsection 19(1) of the FBTAA?
Answer
Yes
Question 10
Where the Units are redeemed by the Employee for cash, will that redemption constitute a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 11
Where the value of the asset(s) allocated to the Unit falls below the Issue Price and the Unit is surrendered to the Trustee in full satisfaction of the Employee's loan obligation, will the surrender of the Unit constitute a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 12
Will a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA, arise where assets are transferred to the unallocated assets account of the Trust?
Answer
No
Question 13
Will the issue of Bonus Units pursuant to the Trust Deed made in respect of the Employee's original unit holdings by the Trustee to the Employee constitute a 'fringe benefit' provided by the Trustee to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No, by virtue of the explicit exclusion of salary or wages from the term 'fringe benefit', as defined in subsection 136(1) of the FBTAA
Question 14
Will the operating costs associated with the administration of the Plan incurred by the Employer be deductible under section 8-1 of the ITAA 1997?
Answer
Yes
Question 15
Will the meeting of operating costs associated with the administration of the Plan by the Employer constitute a 'fringe benefit' provided by the Employer to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 16
Will the payment of Administration Fees by the Employer to the Administrator under the Plan Administration Agreement for the provision of Administration Services to the Trustee be deductible under section 8-1 of the ITAA 1997?
Answer
Yes
Question 17
Will the payment of Administration Fees by the Employer to the Administrator under the Plan Administration Agreement for the provision of Administration Services to the Trustee constitute a 'fringe benefit' provided by the Employer to the Employee as defined in subsection 136(1) of the FBTAA?
Answer
No
Question 18
Will the general anti-avoidance provisions under section 67 of the FBTAA apply to the scheme described?
Answer
No
Question 19
Will the general anti-avoidance provisions under Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) apply to the scheme described?
Answer
No
This ruling applies for the following periods:
Fringe Benefits Tax Year ending 31 March 2011
Income Tax Year ending 30 June 2010
Fringe Benefits Tax Year ending 31 March 2012
Income Tax Year ending 30 June 2011
Fringe Benefits Tax Year ending 31 March 2013
Income Tax Year ending 30 June 2012
The scheme commences on:
1 July 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The Employer intends to implement a long term equity plan for the purpose of providing a long term equity incentive structure to deliver equity based benefits to the Employee.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 Section 16
Fringe Benefits Tax Assessment Act 1986 Subsection 16(1)
Fringe Benefits Tax Assessment Act 1986 Section 18
Fringe Benefits Tax Assessment Act 1986 Subsection 19(1)
Fringe Benefits Tax Assessment Act 1986 Subsection 67
Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)
Income Tax Assessment Act 1936 Part IVA
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 8-1
Income Tax Assessment Act 1997 Subsection 8-1(1)
Income Tax Assessment Act 1997 Subsection 8-1(2)
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